Macquarie removes MakeMyTrip stock from Asia Marquee list By Investing.com

MakeMyTrip shares have fallen ~25% since being added to Macquarie's Asia Marquee list, prompting its removal from the list while the broker maintained an Outperform. Jet fuel spot prices have surged ~80% versus the December-quarter average, which will pressure the international air segment (≈30% of tickets, ≈50% of air ticketing gross bookings, ≈25% of total gross bookings) and keep the stock under short-term pressure amid geopolitics, though stronger domestic travel could support higher-margin hotels.

Analysis

The immediate P&L lever is concentrated: a sustained spike in refined jet fuel raises airline unit costs that are difficult for an OTA to pass through because the platform captures a narrow, commoditized take-rate on air tickets while hotels and packages carry much richer unit economics. That mix sensitivity means a short, sharp fuel shock can compress reported margins quickly even without a structural decline in bookings — a 3–6 month pain window tied to airline pricing cycles and consumers’ propensity to shift away from price-elastic international leisure trips.

Second-order winners will be domestic-facing lodging and ground-transportation exposures that capture incremental volume while preserving higher take-rates; regional low-cost carriers with aggressive fuel hedges or short-haul cost structures may also steal share from legacy carriers. Downside for the OTA is amplified by booking-lead-time dynamics: international tickets have longer lead times, so a fuel-driven pullback today depresses near-term revenue recognition for one to two quarters before domestic recovery shows up.

Tail risks center on geopolitics and hedging mismatch — a persistent energy premium for 6+ months could force airlines to materially increase fuel surcharges or reduce capacity, which would cascade into higher cancellations and longer-term demand destruction among discretionary travelers. Reversals can come faster than the sell-side models expect: visible airline capacity restorations, large hedging gains for carriers, or a quick decline in crude/jet spreads would restore margin mix and trigger a sharp rebound within 4–8 weeks of the catalyst becoming apparent.

For portfolio construction, this is a high-conviction, short-to-medium term volatility trade rather than a long-term fundamental short: the company’s core marketplace remains intact, so protection via options or pair trades is preferable to naked short exposure if the objective is alpha with capped downside.

Key Decisions for Investors

• Directional hedged short on MMYT: Buy 3-month MMYT puts sized 1–2% NAV at ~25% OTM (or nearest available) while funding by selling 6-month MMYT calls 40–50% OTM. R/R: limited premium outlay (~1–2% NAV) vs asymmetric payoff if stock drops 30–50% in 1–3 months; stop-loss: close if jet-fuel price (Brent or jet crack) drops 25% from peak within 30 days.
• Pair trade to capture mix divergence: Short MMYT (0.75% NAV) / Long Booking Holdings (BKNG) (0.75% NAV) for 3–9 months. Rationale: BKNG is hotel-heavy and less exposed to airline fuel shock; expect relative outperformance if international air segment remains pressured. Risk: global slowdown or currency moves could hurt both; hedge with 10% allocation to cash or FX hedge.
• Domestic-recovery long: Accumulate Indian domestic hotel/hospitality exposure (INDHOTEL.NS or similar) sized 0.5–1% NAV over 1–6 months, using drawdown buys if domestic bookings growth data are resilient. R/R: benefits from substitution to domestic travel with higher take-rates; risk is muted if discretionary demand softens nationwide.
• Energy-hedge via commodity spread: Buy a 3-month Brent/jet-product call spread (LCOc1 or nearest ICE Brent instrument) as a portfolio hedge sized to offset estimated additional ticket-cost pressure (~0.5% NAV). This limits premium cost while profiting from further fuel upside that would exacerbate OTA weakness; unwind if jet crack narrows or Brent falls >20% from current levels.